COURT AND TREASURY DECISIONS.

The court can not disregard the condition upon which the law makes the duty depend. Temporary stringing for facility in transportation only precludes classification as "not threaded or strung." (Frankenberg Co. v. United States, 206 U. S. 224, of 1907.) Under the rule that dutiable classification must be ascertained upon examination of the article in the condition in which it is imported, pearls ready for stringing and actually strung as a necklace before importation were held not pearls set or strung for tariff purposes, but "pearls in their natural state, not strung or set" (par. 436, act of 1897). The court also held that a prescribed rate of duty can not be escaped by disguise or artifice; but if an article imported is not the article described as dutiable at a specified rate it does not become dutiable under the description because it has been manufactured for the purpose of being imported at a lower rate. (United States v. Citroen, 223 U. S., 407, of 1912.)

Separate provision is made in the act of 1913 for beads, including imitation pearl beads, temporarily strung for facility in transportation only (par. 333), but none for pearls.

See Surveys on Precious Stones Advanced and on Imitation Precious Stones.

PRECIOUS AND SEMIPRECIOUS STONES, ADVANCED.

(See also U. S. T. C. Surveys on Uncut Precious Stones and Imitation Precious Stones.)

SUMMARY.

Description and uses.-Cut precious stones are crystals of various minerals which have been shaped or cut, and polished, to enhance their color and brilliancy. Diamonds, rubies, emeralds, sapphires, and opals are the most important and valuable of the precious stones, but many other minerals are used as gems, although the market in most cases is limited. Precious stones are used for ornamenting jewelry and novelty articles. The diamond is by far the most important precious stone and data contained in this survey applies to diamonds except where otherwise stated.

Domestic production. The domestic production of gem minerals is small, but the domestic industry engaged in cutting gems of foreign origin, is well organized, and during 1919 (fiscal year) fully one-third of the gem imports were rough crystals which were cut in the United States. The manufacturing process is largely handwork, and the skill of the operator plays a large part in the successful operation of the industry. Fifty-eight to sixty-one per cent of the rough stone is lost in the cutting operation, but the waste is marketable for industrial and abrasive purposes.

The diamond cutting industry is carried on principally in and about New York City, and is conducted in both small and large shops. Expert diamond cutters command salaries of over $100 per week.

Foreign production.-Amsterdam and Antwerp have always been the world's largest precious stone cutting centers. In Europe, the industry is carried on in both large and small shops, and in many cases the workers are confined to members of the cutter's family.

The war eliminated Belgium and greatly curtailed the industry in Holland because of the scarcity of raw material. As diamond production was resumed in South Africa, the Dutch, French, English, and especially the United States cutting industry expanded to supply the demand formerly satisfied by the Belgians. The Belgian industry is now operating again. The English cutting industry profited by the war and Great Britain is taking steps to retain the advantage gained.

Imports.—Imports of gems fluctuate with the prosperity of the country. There has been a general increase in the value of rough material. In 1910 importations of rough stones were 22.8 per cent of the total, and in 1919 33.5 per cent. Imports of cut stones during 1914, 1918, and 1919 were valued at approximately $20,000,000, $8,700,000, and $69,000,000, respectively.

Prices.-The value of a gem varies with the variety, size, cutting, color, and the freedom from flaws.

Tariff history.-High duties on precious stones result in extensive smuggling operations, and for this reason the duties on gems have always been held at a comparatively low level. In the act of 1894 finished gems were dutiable at 25 per cent, and at present they are dutiable at 20 per cent, but in the other acts since 1883 a uniform rate of 10 per cent was maintained. Rough stones were on the free list in the tariff acts of 1883, 1890, 1897, and 1909. In the acts of 1894 and 1913 they were made dutiable at 10 per cent.

Competitive conditions.-The domestic cutter competes actively and successfully with the European under present conditions, at least on material legitimately imported, but the European cutter is able to work up smaller stones and chips, thus obtaining larger profit from his waste material. The cutting of chips and very small stones is, in some cases, performed by women or by apprentices in the trade.

That part of the industry working on precious stones other than diamonds is highly organized abroad, but the domestic industry can compete in this field under normal conditions. Total importations of cut stones during the period 1910-1919 were valued at twenty times the value of rough stones imported, but rough material of this character is quite inexpensive, and domestic production is considerable. Tariff considerations.-The more precious gems (diamonds, emeralds, natural rubies, natural blue sapphires, opals, and pearls) are very valuable per unit of size or weight and are easily concealed about the person. A high duty encourages smuggling and in the end demoralizes the market by discouraging legitimate importations. In the last year of the period 1894 to 1897, when duties were 25 per cent on cut stones and 10 per cent on rough material, the revenue from gem duties was less than that during the fiscal year 1894, when the duty was 10 per cent.

All branches of the gem and jewelry industry (cutters, importers, wholesalers, and retailers) are united in favor of a tariff of not over 10 per cent on the most precious cut stones.

It would appear that higher duties on precious stones other than diamonds, blue sapphires, rubies, emeralds, opals, and pearls would not result in excessive smuggling, but as the imports are largely individual stones of great beauty the value per carat often places them in the same class with diamonds. Furthermore higher duties on these so-called semiprecious stones would seriously affect the export market for the fine jewelry in which these stones are mounted.

GENERAL INFORMATION.

(See also T. I. C. surveys of uncut precious stones and imitation precious stones.)

TARIF ACT OF 1913.

Par. 357. * *; diamonds, coral, rubies, cameos, and other precious stones and semiprecious stones, cut but not set, and suitable for use in the manufacture of jewelry, 20 per cent ad valorem.

DESCRIPTION AND USES.

Cut precious and semiprecious stones are crystals of various minerals which have been cut and polished to enhance their color and brilliancy. Rubies and diamonds are true precious stones. Coral is the shell of a marine crustacea. Cameos are precious stones (usually onyx) which have been carved in relief. The Italian cameos consist of a light and a dark layer of mineral. This is carved so that one layer forms the relief carving and the other the background.

Cut gems are used for ornamentation on jewelry and expensive novelty articles. Precious stones which are to be used for industrial purposes are manufactured by rough shaping; these products are treated in the survey on uncut precious stones.

DOMESTIC PRODUCTION.

The crude, rough crystals of mineral used for gems are found in all parts of the world, as described in the survey on uncut precious stones. The rough stones are sent to cutting centers and very few, if any, are cut at the point of origin.

Materials.-Rough crystals of the gem mineral are used as raw material. Lead or cement is used to hold the crystal during the cutting and polishing operation, and diamond dust or other abrasive is used for shaping the stone.

Equipment. Very simple machines are used for grinding and polishing the faces of the crystal. Handwork is the most important part of the procedure, and the cutter's success depends on his obtaining the maximum possible weight of cut gem from his raw material. The crystals are sawed by a disk of metal impregnated with diamond dust.

Methods of manufacture.-Rough diamond crystals are first carefully inspected for flaws and irregularities and then split along the natural cleavage planes. In this operation it is often possible to eliminate flaws so that perfect cut stones can be produced from flawed, rough material. The divisions formed by the first splits are all worked up into gems if of sufficient size. The later splits and sawed fragments produce slivers of crystal that are used for glaziers' and engravers' diamonds or are ground to powder for abrasive purposes.

The roughly shaped gem is imbedded in a cake of lead or cement and roughly shaped by grinding it against another diamond. The facets are cut by pressing the stone against a revolving table covered with diamond dust and oil. The stone must be reset for grinding each quarter and the cutter is the sole judge of the amount of grind

ing necessary. In a trade of this kind where a slight error of judgment may spoil a stone worth thousands of dollars, skilled labor commands a high price and wages run over a hundred dollars a week. A perfectly cut stone contains 64 facets besides the table.

Emeralds, rubies, and other precious stones are cut in various shapes to bring out the color and brilliance. They are softer material, and are more easily shaped. Carborundum dust is used instead of diamond dust for cutting and the facets are polished with tripoli powder.

A skillful cutter will produce cut diamonds weighing from 39 to 42 per cent of the weight of the rough crystal. The shape of the raw material and the prevalence of imperfections plays a large part in the possible recovery and cut stones weighing as little as 30 per cent and ́as much as 50 per cent of the weight of the rough stone are by

no means uncommon.

Organization. The diamond and precious-stone cutting industry is operated in both large and small units. Most of the rough diamonds are bought from the British diamond syndicate, and for this reason there is eager competition for places on the mailing list of that organization. The syndicate offers the stones in assortments at a fixed price and the cutters are forced to accept the syndicate valuation sight unseen or lose their place on the list. Large quantities of diamonds are sold rough by the original purchasers, but this source of supply is uncertain.

Geographical distribution. The precious-stone cutting establishments are concentrated in and about New York City. A few cutting establishments are located in other districts, but the total weight of diamonds cut outside is small. The shops outside the New York district specialize on semiprecious stones.

History of the industry.-Precious stones were practically all cut abroad until about 1875. The expanding market for cut stones (especially diamonds) in the United States and the 10 per cent domestic duty on cut stones caused Belgium and Dutch cutters to locate in New York. The large jewelry houses installed cutting establishments to handle their special trade, and the cutters, recruited abroad, often opened shops of their own after a period of employment with the store that brought them to this country.

The industry suffered a reverse in 1896-97, but since that time has grown steadily. At present fully a third of all the precious stones sold in the United States are cut in New York.

At the outbreak of the war large numbers of the Belgian cutters migrated to Holland, England, and to the United States. This has resulted in a surplus of labor in the New York market, but the condition is temporary, as most of the Belgian refugees are returning to Belgium.

Domestic production and consumption.-Although the United States absorbs more diamonds than any other nation, the domestic production of gem material is very small. The domestic cutting industry, on the other hand, has increased steadily, and New York is fast becoming one of the world's great precious-stone cutting centers. There are no data available by which the number of carats of cut stones produced here can be determined, but import valuations of rough and cut material show the ratio between the values of the imports of each kind. In 1910 (fiscal year), 22.8 per cent of the

precious-stone imports were rough material; in 1911, 24.5 per cent; in 1912, 25.5 per cent; in 1913, 28.7 per cent; in 1914, 26.9 per cent; 1915, 26.1 per cent; 1916, 34.5 per cent; 1917, 33.2 per cent; 1918, 46.6 per cent; and in 1919, 33.5 per cent. The percentage decrease in 1914 was due in part to unsettled industrial and commercial conditions. In 1915 the African diamond mines were shut down and there was a temporary scarcity of the uncut stones. The elimination of the Belgium industry, together with the restoration of the mines to a production basis, caused large increases in the amount of stones cut in the United States during 1916, 1917, and 1918, but when, in 1919, the Belgium industry was able to reenter the market, and conditions in the other European centers began to return to a normal basis, the percentage of stones imported rough dropped to little more than the 1917 figure.

Domestic exports.-No precious stones of domestic origin are exported. A small amount of stones of foreign origin are exported to Canada.

FOREIGN PRODUCTION.

The world's lapidary (precious-stone cutting) centers have for years been located in Amsterdam, Holland, and Antwerp, Belgium. London and New York have become centers of some importance in the industry, but most of the rough stones were sent to the continental cutters prior to the war. The war eliminated Belgium and strengthened the position of the industry in France, Holland, England, and especially in New York. The emigrants are returning to Belgium in large numbers, but it will be some time before Antwerp regains her old place as a leading precious-stone center.

Great Britain is at present working out a plan for expanding her precious-stone cutting industry by instructing disabled war veterans in the trade. The plan is still in the experimental stage, but domestic gem dealers are of the opinion that it will not materially increase the importance of England as a gem-cutting center.

IMPORTS.

Imports of finished gems have decreased during the period from 1910 to 1920. There has been a considerable fluctuation, and during 1915, due to the war, imports dropped to $9,000,000, from $20,000,000 in 1914. Great Britain regulated the traffic in diamonds during the period of the war so that there would be no chance for the stones to fall into enemy hands. In this way smuggling was practically eliminated, and imports declared during that time are probably a very accurate measure of the entire importations. During the fiscal year 1914, the first year of the increased tariff and the only normal year since the tariff act of 1913 was passed, importations of cut stones dropped from $30,000,000 to $20,000,000, and importations of rough stones decreased from $12,000,000 to $7,000,000. Cut stones valued at more than $69,000,000 were imported during 1919.

The importation record of the period from 1894 to 1897 clearly show the effect of a high tariff on the legitimate importations of diamonds. In 1894 the duty on rough stones was placed at 10 per cent and on cut stones at 25 per cent. Prior to this time rough stones were on the free list and cut gems were dutiable at 10 per cent.